Firms Hope Parcel Boxes Will Strengthen E-Marketing's Last Link

Virtual retailers have spent billions of dollars and applied immeasurable brain power figuring out marketing, merchandising, fulfillment and customer service issues related to e-commerce. Now they face another challenge: The "yellow sticky" problem.

The term refers to the little notes on front doors across the country telling consumers that a package was undeliverable because no one was home or the mailbox was too small. Now a handful of companies are trying to capitalize on the problem by building high-tech parcel boxes for receiving goods, especially products bought online.

"There are specific studies that show that 75 percent of households have nobody home during the day, and yet there's also this statistic [from] Forrester that says Internet retailing is growing to $184 billion by 2004," said Stacie McCullough, senior analyst at Forrester Research, Cambridge, MA. "So what that means is lots of people are ordering online, but the product has nowhere to be delivered."

At least four companies are pioneering the market for general parcel boxes, McCullough said, and to succeed, they will have to work closely with the delivery companies and Net retailers. Secure access to boxes, especially, might require three-way cooperation. For their part, the box makers suggest it would be best for everyone to coordinate their efforts.

"If you look at companies like Amazon and a lot of the e-tailers, certainly they need the channel to work. And now it doesn't always work," said Carter Griffin, co-founder of MentalPhysics Inc. The firm plans to debut a line of parcel boxes midway through next year. "[E-tailers] can ensure … an effective order-processing system and getting the product out of their warehouse. But they can't ensure that the customer has a satisfactory experience all the way through."

Not that some marketers aren't trying on their own. Web-based grocers, especially, have aggressively built delivery networks, and sometimes use boxes specific to their products. Peapod Inc., Webvan Group Inc. and others deliver food, usually on a citywide basis. Other online companies deliver film, gifts or videos. For the most part, these firms are hemorrhaging money.

According to David Porter, the owner of Garment Care, a dry cleaning company in North Kansas City, MO, those Web companies are unprofitable because they're delivering too few packages across too broad an area. In 1998, wanting to move his firm online, Porter patented a box designed for the pickup and delivery of direct-ordered goods. MentalPhysics has since licensed that patent for its own prototypes.

"[Online retailers] can't bring profits unless they increase the density of delivery," Porter said. "And that's what the box is all about." If a large number of homes are able to receive goods in a secure box, online and offline direct marketers will be able to more easily justify the cost keeping trucks and drivers on the road, Porter said.

MentalPhysics, Vienna, VA, is designing a box that isn't retailer-specific like those built by some merchants. But the product, code-named "Oscar," will be accessible only to parcel services that use a delivery-specific code. It will then automatically notify the recipient via e-mail, pager or telephone that the drop has taken place. Griffin said MentalPhysics is spending most of its research and development dollars on the communications system installed in the box. Later generations of the box might be able to refrigerate goods as well.

He suggested Oscar will look considerably different than Porter's box. MentalPhysics' first market is single family homes in suburban areas. Later models for apartment buildings might be similar to airport locker systems, he said. Forrester's McCullough was skeptical about such boxes however, saying she doesn't see wide usage of common-area boxes in the near future.

"No way," she said. "The process to get that kind of stuff approved is going to be extremely time-consuming and complex."

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